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How to Get New Users to Become Paying Customers

It’s easy to have a laser focus on trying to increase new user sign ups.

Especially when we are constantly being bombarded with literature out there like: “How to Increase Your Sign Up Conversions!” and “How to Create the Ultimate Sign Up Button!”

And you might even say to yourself once in a while, “If I can just increase the sign up conversion rate X% we’re gold!”

However, this is probably not the area you want to focus on. As a matter of fact, if you spend most of your energy on the step after sign up, I’ll wager to say you’ll have a healthier business in the long run.

Now I’m not saying to not spend ANY energy on your sign up process, but really, most of your focus should go towards getting people to activate into paying customers.

Why? Well, there are two really important reasons:

Because honestly, getting people to sign up for something free is fairly easy. The real bottleneck in most SaaS conversion funnels is getting people to pay. And as we all know, unrestricting bottlenecks generally has a multiplying effect on your revenue.

By doing so, you’ll learn A TON of important information about what makes your customers value your service. This information is key for strategizing and growing your business.

Activation: Getting Users To Become Customers

Most SaaS businesses track this funnel:

Like we said earlier, it’s easy to get people to sign up for the “free stuff”. But how do we “activate” them into paying customers?

These users have read about your service, heard about it from a friend, and eventually decided to sign up. But that doesn’t mean they are ready to whip out their wallets right away. They will need to experience something valuable about your product first.

Activation is: The first point where you deliver the value that you promised.

Understanding this point in your own SaaS funnel is the key to getting your non-paying users to become paying customers.

Before I show you where you can learn about how to get new users to become paying customers, let’s go through some examples of companies that perform this magic trick really well…

Dropbox

We talk about Dropbox a lot on this blog, but for good reason. They do a lot of things really well.

In particular, they are wizards at getting free users to become paying customers. Check this out:

It actually starts at their super simple sign up page.

This is all about first impressions. Before anyone becomes a paying customer, the introductory experience is fairly simple. Keeping things simple turns out to be a very hard thing to do, but users generally pay for ease of use.

Notice that the download .exe is only 152 KB, about the size of most website background images! More painless, easy experiences…

The team at Dropbox are masters at the soft sell. They make you love their product first before you would ever need to upgrade. Most companies would FORCE you to upgrade and take advantage of the memory bind you may be in. That never leaves a good taste in a customer’s mouth.

Now if you’ve use their web interface, you’ll notice in the incredibly un-cluttered navigation a little icon that says “Get Free Space!” Clicking on that brings you to this wonderful page:

Look at the genius ways they have incorporated the ways users can obtain free space.

Let’s start with this one: Get started with Dropbox = 250 MB

This is smart for many reasons. But honestly, rewarding your customers to learn your product is as clever as it gets. One of the biggest reasons why people don’t upgrade is because they just aren’t aware of the other features that provide value.

You can make all the FAQ pages, videos, and infographics you want – but if your users never look at it – what purpose does this media really serve? What Dropbox has done here is brilliant because it’s an easy way to get this information across. All they had to do was get users to “take a tour” and reward them with something they want: FREE SPACE!

I’m going to skip over the Facebook and Twitter connections because it’s fairly obvious.

Let’s look at that last one: Tell us why you love Dropbox = 125 MB

This is a great way to complete your product design cycle: incentivizing users to give feedback. You need a continual monitoring program to really hone your product. Knowing why people love your product does many things:

It gives you the language that resonates with your customers. They tell you why they like your product in “Customer Speak”. That’s gold. Use these phrases in your marketing copy and see what results pile in.

They tell you what use cases make their lives easier. This is a real eye opener sometimes. Knowing why your customers use your product is a great way to stay on the right development track – instead of following some pipe dream that the founding team THOUGHT would be the saving grace of the company years ago (over beers and pizza of course). This becomes a mechanism to help you improve the new user experience ;) – which is what helps you increase the amount of paying customers.

Ultimately what all this boils down to is: They have created a user experience that people love. Nothing is hard. Free space is easy to come by. Trust is built. And most importantly – users most likely have spent plenty of time using the product, getting comfortable with it – and of course: now probably depend on it.

Now when it’s time to upgrade – having the customer pull the trigger is easy. There is no harsh transition. If all their files are already in Dropbox, and their colleagues and friends are using it…getting them to pay a little every month is very reasonable.

So ask yourself: How can you create a similar “courting experience” with your product? Chew on that for a while and you’ll probably get excited enough to call a meeting soon :).

Finally, in this example – we should ask one very important question: How does the new user experience (NUX for short) help get users to paid activation?

In the case of Dropbox: Getting users to sync files.

So in your own case, be sure you can identify the one thing that you must get users to do to see the value in your product.

Shopify

Unlike Dropbox, which has a somewhat long term, slow sell strategy – Shopify is all about getting the new user experience right in the first 15 minutes.

Right off the bat the home page video addresses the problem and solution in the simplest manner possible.

Setting up an online store is a breeze. 3 fields and you’re on your way…

And here’s the smart step. They put the slightly painful process of account details AFTER you have created your store:

Once you fill out this form you’re ready to rock.

Now, I’m not going to get into how easy it is to add products (because it’s pretty darn easy). This post is about the courting experience I’m having with Shopify before I become a paying customer.

As an ecommerce business owner, a few things will be worrying me before I fully commit. First off – the issue of merchant accounts: How does it work? What are the fees?

As I peer down the page I see that every possible method is probably integrated with my Shopify account. As I learn more, they are fully able to interact with almost all merchant gateways.

What about if I want to use Shopify functionality on my own website? Well one simple chat confirms that I can.

And finally, what if I want to shoot my existing domain name over to this pre-made online shop?

By clicking on the domain’s button in this progress bar, I find out that’s not an issue either.

The lesson here is it only took about 10 minutes of my time to set up a shop and find answers to all the questions that were lurking around in my head – questions that would potentially cause me to click away and never finish my trial.

Intuitive usability always helps you covert trial users into paying customers. With that said – relentlessly find out what your customer’s pain points are and make it very easy to find answers to their potential issues. And of course, make set-up as painless as possible.

“A lot of the power of the Shopify model comes from the step-by-step breakdown. There’s no confusion on what to focus on next.” – Lars Lofgren, Analytics Guru at KISSmetrics

Finally, if Shopify provides an easy way for me to make a livelihood online, I will probably stick around past the free trial and become a paying customer. Especially, if I’m already driving traffic to my Shopify store.

How does the new user experience (NUX for short) help get users to paid activation?

In the case of Shopify: getting users to sell an item. And the only way to do that is to be able to help them set up shop quickly and easily.

So How Do You Improve Your SaaS Activation Funnel?

Getting people to check out your product for free is pretty easy. The hard part is getting them to pay for it.

The whole point of improving your SaaS activation funnel is to get your users to see the core benefit of your value as soon as possible. If they don’t see the value in your product, you’ve lost them.

And you do that by structuring the activation process to help users to get to that point of “value enlightenment”.

Since every single one of you has a slightly different SaaS activation scenario, we are going to have a webinar to help you all out.

We’ll go through the fundamentals of how you can improve this process, as well as our famous Q&A session. Here it is:

How does my email drip campaign fit into this once a new activation occurs?

Or, is it better to make the registration process a little bit longer and present all these cool goodies upfront …. sprinkle them throughout the dashboard and let them bite at their convenience? … or send out email teasers throughout the free trial? I’m guessing its a combination, but just curious what your thoughts are around this.

Well remember – what’s the one thing you need new users to do to see value in your product? Identify that event and design your email drip campaign to make it easier for your new users to make that event happen.

But as you think about this, you may find that there is more to it than just email. You may want to rework your whole new user experience to get that event to happen.

Finally, talk to your current users. Ask them why they signed up for your service. The information you get from them will be valuable in shaping this process. Like Lars says, take some of them out for coffee!

Liked the thought “They make you love their product first before you would ever need to upgrade.”

Asking for user reviews for an incentive is a great way to spread the love. Also you can use “One thing you want to change about product X” helps you to fix the glitches or move towards better user experience.

Sourav, that’s a good idea! Like I said in Todd’s reply – talking to your customers is really the only way to find out that critical information. Just make sure you talk to enough of them to get a good breakdown of what their pain points are and what they are looking for in your product.

This article just BLEW ME AWAY! I needed this advice that most people (money hungry) will not provide. Building a trusting relationship is an important aspect of building a successful business. Thank you sharing this value information for us to build better relationships with our clients.

I saw your post earlier but just got around to reading it. Good stuff! It’s actually something I’m really interested in. The getting started list by dropbox is what we want to productize for all web applications for our next Kera release. If you’d like to delve into this topic more, I’d love to do a guest blog post for you on it– looking at the onboarding experience of Box, Dropbox, and LinkedIn using progress bars.

Great piece here Sean. Dropbox is indeed simple and easy to use. Didn’t know they provided free space for users to consume their content or share their experiences. That’s pretty clever.

We just launched our guest blogging app three days ago and are delivering a tremendous amount of value before we ask for a dime. We made this choice even before seeing your article, so good to know we’re on the right track.

I really love what dropbox have done with the earn more space with certain actions. I want to implement this in ‘my account’ sections of e-commerce websites with coupons and exclusive products available.

What I take away from this is that the concept is very simple. Get users to fall in love with your product before they make an investment in it. In other words, get them hooked , so when they get asked to pay they have no choice. Do this by adding superior value, where the monthly payment is an investment and not a cost. ;)

One way for SAAS companies to improve communication is by publishing a service health dashboard. Your readers may be interested in 30suns.com, a new service that make it easy to publish incident reports on a ‘status page’.

As long as the product or service provides a clear differentiation from other products and services the possibility of getting a customer to purchase is half way there. If a company offers a substantiated product or service that is guaranteed to fulfill a need, their objective should be directed toward specifying why their product of service should be chosen over the others. That is to say, answering all the questions and leaving no room for uncertainty. In my opinion, the site should be upfront, easy to navigate, and all pertinent information ought to be displayed.

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